Your shares are worthless? Things may not be as bad as you thought.
It’s a nightmare scenario. You’ve invested in a company and then discover that it has collapsed and that its shares have become worthless.
Imagine, for example, owning a slice of Carillion – which went from being one of the UK’s largest construction businesses to a company revealed to have £1.5bn in debt and whose shares were suspended.
If HMRC declares shares to have ‘negligible value’ (as they have in the Carillion case), you’re entitled to capital gains relief, which will help you to reduce your tax liability.
Here are some commonly asked questions:
How does it work in practice?
In effect, you can set the original cost of the asset against other capital gains in the current tax year or even carry it forward against gains in future years.
Can I backdate a claim?
Yes. You can treat it as a loss arising in either of the two preceding tax years.
Can I claim loss from unlisted, negligible-value shares against income?
In theory, yes, but you’ll need to consult your accountant as you’ll need to meet a significant number of conditions.